Battling the economic enemy

April 03, 1991|By Los Angeles Times

IF PRESIDENT Bush could do to the national recession what, as commander in chief, he did to the Iraqi army in Kuwait -- i.e., wipe it out -- some people might want to launch a campaign to abolish the 22nd Amendment.

Forget about such a scenario, however: The recession is a more resourceful and powerful enemy than even one of the world's largest military forces. Everyone realizes that the age-old Keynesian remedies for jump-starting an economic engine are mostly unavailable when fiscal prudence -- and worldwide pressure -- requires Washington to address the huge budget deficit. So let's avoid cheap calls for instantaneous action to solve the recession overnight.

Certainly the president himself has very modest expectations for what he wants to achieve. To stimulate an economy that has been flatter than the Saudi desert, he has relied on the limited weaponry of monetary stimulus. White House pressure on the Federal Reserve no doubt was an important factor, but not the only one in driving down the bellwether federal discount rate. But otherwise the president has sought a low profile on economic policy.

No doubt he is simply hoping for the best -- for a rapid economic upturn. Perhaps that in fact is coming. In February the government's index of leading economic indicators popped positive 1.1 percent -- the largest uptick in three years -- and the reported sales of new homes jumped 16.2 percent.

But ultimately consumer confidence is essential to a full recovery, so it is no surprise that a national poll shows that the public would prefer that the president exert himself more strongly in economic policy. What the public sentiment suggests is that the recession has gotten on everyone's nerves and people are uneasy with the president envisioning such a limited role for his administration.

One paradox is that on the issue of worldwide free trade the president has demonstrated considerable leadership. He has been seeking fast-track approval authority for the international trade negotiations known as GATT, and he has championed the tricky but vital issue of free trade with Mexico and Canada. More of this is wanted. The American people aren't asking for miracles from the president but they are asking for more involvement.